Federal officials mum on explosives incident in Malvern

EAST WHITELAND — Federal officials provided few details about the search of a Malvern storage locker that resulted in the controlled detonation of about 60 pipe bombs Thursday night, though multiple officials confirmed the incident was connected to a federal Ponzi scheme investigation.

According to a high ranking official close to the investigation, agents with the FBI and members of the Montgomery County and Philadelphia bomb squads removed the explosives from a storage locker at Malvern Public Storage in the first block of Lancaster Avenue. The pipe bombs were then transported to a nearby park, where they were detonated overnight.

At least six large explosions were heard and felt in the area, and one Newtown Square resident contacted authorities after feeling the blast.

The official, who asked to remain anonymous due to the ongoing and sensitive nature of the investigation, said that the storage locker was registered to 42-year-old Istvan Merchenthaler, a Chester County man facing federal charges in connection to a Ponzi scheme that officials say defrauded investors of about $2 million over the past seven years.

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Merchenthaler is accused of claiming to be the founder of PhoneCard USA, a company that was purportedly a “premier distribution source” for prepaid phone cards and cell phones. In reality, Merchenthaler was operating a Ponzi scheme in which more than $2 million was stolen from more than 200 investors, authorities said.

Officials close to Merchenthaler’s case said the suspect was connected to similar explosive investigations in other states, and added that he is facing charges in multiple jurisdictions throughout the east coast.

Using several aliases, Merchenthaler approached investors between May 2006 an February 2013 in an effort to gain financing for the scheme, officials said. He used marketing materials that claimed their investments would result in “exponential growth” and result in “generous returns” on their investments, authorities said.

According to the United States Attorney’s Office, Merchenthaler also falsely claimed that PhoneCard USA held “lucrative contracts” with major retail chains covering much of the east coast. He also claimed to have personal relationships with high-ranking executives at Walmart and 7-Eleven, officials said.

Merchenthaler, who is in federal custody, is also accused of stealing two cars from dealerships while on pretrial release.

On Feb. 11 Merchenthaler was arrested by members of the Pennsylvania State Police in West Nottingham after he attempted to elude troopers who were conducting a traffic stop. According to officials familiar with the case, Merchenthaler attempted to flee troopers in a stolen vehicle before his arrest.

Merchenthaler is facing a total of four counts of wire fraud, two counts of aggravated identity theft, four counts of money laundering, and two counts of interstate transportation of stolen property as a result of the federal indictment.

He is also facing three counts of receiving stolen property, fleeing or attempting to elude a police officer, and related charges in connection to his most recent local arrest, according to court records.

If convicted of the federal charges, Merchenthaler faces up to 170 years imprisonment, a $3.5 million fine, 3 years of supervised release, and a $1,400 special assessment, officials said.

A spokesperson for the FBI was unable to confirm Thursday night’s incident to the federal investigation of Merchenthaler.